Cotton Clothing Under Pressure: How the Hormuz Crisis Is Reshaping the Global Textile Supply Chain

The closure of the Strait of Hormuz following the US-Israeli strikes on Iran on February 28, 2026 has triggered a cascading disruption across global cotton and textile supply chains. While cotton is not directly produced or exported through the strait, the crisis affects the cotton clothing industry through multiple indirect channels, including a historic shift in the cotton-polyester price spread, severe logistics bottlenecks at major Middle Eastern transshipment ports, and rising agricultural input costs driven by fertilizer and energy shortages.

The most significant impact on cotton markets is the inversion of the cotton-polyester price spread. Polyester accounts for approximately 59% of global fiber production and depends heavily on petrochemical feedstocks such as Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG), both derived from crude oil and naphtha. With Brent crude surging past $120 per barrel and naphtha prices spiking nearly 90%, polyester staple fiber (PSF) costs have jumped 25% to 40% across Asian markets. Indian PSF prices alone have risen by over 30% since the start of the conflict. In contrast, Indian cotton (Shankar-6 grade) prices have increased by only about 3.5%, and cotton yarn export prices have remained nearly flat. This marks the first time in years that cotton has regained cost competitiveness against polyester, forcing brands, manufacturers, and sourcing offices to reconsider their fiber-mix decisions for the Spring/Summer 2026 production cycle. At least 11 force majeure declarations have been issued across Asian petrochemical plants, further tightening polyester supply and accelerating the demand shift toward cotton.

Logistics disruptions represent the second major channel of impact. The Strait of Hormuz serves as the sole maritime access point to the Persian Gulf, where several critical transshipment hubs handle significant volumes of textile freight. Jebel Ali in Dubai operates as the largest container port in the Middle East and a key relay point for cargo moving between Asia, Europe, and Africa. The Port of Salalah in Oman is another major transshipment hub for garment shipments, used by brands like Gap, Banana Republic, and Old Navy. Hamad Port in Qatar and Khalifa Port in Abu Dhabi also process substantial textile cargo volumes. With maritime traffic through the strait dropping by more than 95%, these ports have become severely congested or effectively inaccessible. Indian textile exporters who typically route shipments through Jebel Ali for onward delivery to Europe and the Middle East are now forced to reroute containers around Africa via the Cape of Good Hope, adding 20 to 25 days to transit times and significantly increasing freight and insurance costs. Durai Palanisamy, Chairman of the South India Mills Association (SIMA), has warned that exporters face order cancellations and pressure to sell goods at discounted prices due to these extended delays. Quote validity periods for textile orders have been shortened to 24 to 72 hours due to extreme price volatility.

India is at the center of this disruption as the leading exporter of cotton-based products to the United States, having surpassed China in 2025 according to USDA data. India shipped approximately 0.6 million tonnes of cotton products to the US market last year, benefiting from its vertically integrated supply chain and compliance with traceability standards under the Uyghur Forced Labor Prevention Act. The city of Tiruppur in Tamil Nadu is the epicenter of this industry, producing 90% of India's cotton knitwear exports and generating over $4.7 billion in export revenue in fiscal year 2024-25. The city hosts more than 10,000 garment manufacturing units employing over 600,000 workers, supplying major global brands including Walmart, Primark, H&M, Zara, Gap, Tesco, Marks and Spencer, Decathlon, and Target. Tiruppur exports approximately 35% of its production to the European Union, 35% to the United States, and 10% to the Middle East and Canada. With Gulf markets now effectively cut off and European delivery routes severely delayed, the cluster faces mounting pressure on margins and delivery timelines.

Bangladesh, Pakistan, and Vietnam face similar challenges as top cotton garment exporters. Bangladesh imports nearly all of its raw cotton at 8.4 million bales annually, making it the world's largest cotton importer, and depends on maritime routes now disrupted by the conflict. Pakistan exports over $16 billion in textiles annually with a strong specialization in cotton products like denim, towels, and bed linens. Kontoor Brands, owner of Wrangler and Lee, has reported that over 60% of its apparel output sourced from Asia faces potential disruption, with cotton sourcing from India and Pakistan particularly at risk. Vietnam, the second-largest cotton importer globally at 8 million bales per year, is similarly exposed to rising shipping costs and extended lead times on routes passing through or near the conflict zone.

Rising agricultural input costs add a third layer of pressure on cotton markets. Approximately one-third of global seaborne fertilizer trade, including nitrogen-based products essential for cotton cultivation, normally transits the Strait of Hormuz. Urea prices at the New Orleans import hub surged by more than 28% within three weeks of the closure, climbing from approximately $516 to $683 per metric ton. Cotton farming is nitrogen-intensive, and higher fertilizer costs will push up production expenses for growers in India, the United States, Pakistan, and West Africa during the current planting season. Energy costs have also risen across textile manufacturing operations, with global textile production costs estimated to have increased by 10% to 15% since the start of the crisis. The combined effect of these disruptions has been described by industry analysts as the sharpest textile supply shock since the COVID-19 pandemic.

The crisis is expected to persist for several months even if a ceasefire is reached. Shipping networks, insurance markets, and carrier schedules will require significant time to normalize after weeks of rerouted vessels and suspended services. Carriers are implementing emergency conflict surcharges at record levels, and the prospect of a return to normal Red Sea and Gulf shipping routes before the second half of 2026 is considered unlikely by most logistics analysts.